The interdependence of organizational knowledge and financing: Studies of technological innovation, learning, and corporate restructuring in United States medical device ventures

Abstract

A critical component of corporate research and development (R&D)
efforts is access to funding. To raise the large amounts of capital
required for continued growth, R&D-intensive start-ups must often
turn to initial public offerings (IPOs) or takeovers by established
firms. Yet, these transactions are not simply short-term events that
infuse capital into firms, but delineate distinct stages in the
evolution of high-tech ventures. Thus, these transactions may
subsequently shape the very innovative activities they are funding.
This dissertation consists of two studies that examine the
relationships among organizational innovation, learning, and corporate
restructuring at different stages in the life cycles of medical device
ventures.

The first study focuses on the period before any
liquidity event. It develops and tests theory concerning how and when
private ventures' capabilities for technological innovation affect
their rates of IPO versus acquisition. I show that the strength of a
firm's technological knowledge base increases IPO rates, while the
strength of a firm's product knowledge base increases acquisition
rates. Exploratory search that builds on knowledge developed by
technologically distant firms has a positive effect on IPO rates, but a
negative effect on acquisition rates. I also show that product-based
exploitative search increases acquisition rates, and product-based
exploratory search increases both types of liquidity event rates. In
addition, equity market conditions, venture capital investment, and
alliances moderate the relationships between organizational innovation
and liquidity event rates.

The second study investigates
whether, how, and when going public affects firms' innovative
activities. I propose that an IPO fundamentally reshapes a firm's
internal operations, and consider implications for the firm's overall
rate of innovation and its innovation search strategies. I find that a
firm's overall rate of innovation increases after the firm goes public.
Going public also increases the proportion of innovative search that
exploits internally developed knowledge and the rate of exploratory
innovation building on public-sector knowledge. I use inverse
probability of treatment and censoring weights to account for
self-selection into IPO and the presence of time-dependent confounders;
estimates represent population average treatment effects.

Doctoral Program News

Honigsberg featured in Ideas at Work

The August issue of Ideas at Work features research that doctoral candidate Colleen Honigsberg led in conjunction with Sharon Katz.

Profiles: PhD Students

Shiri MelumadMarketing
When asked about the Program's sense of community Shiri says: “There is a tight-knit community amongst the marketing students, and the relationships I have formed have been both professionally and personally rewarding.